Canadian tax laws for Uber/Lyft Drivers

Drivers and passengers are customers of the marketplace, not the company’s workers. Neither drivers nor passengers have any rights as users of the community platform regarding benefits, reimbursement, or unemployment insurance. There are no middlemen; drivers use their vehicles to pick up customers who request a trip via the Lyft app. As part of Lyft’s dedication to community and safety, all drivers undergo a thorough screening process that includes background checks and vehicle safety inspections.

Lyft does not follow the taxi or limousine, business model. With the help of the Canadian government relations team. A tax expert in good standing with the CRA can answer your particular tax status or how to submit taxes.

To earn income, Uber and Lyft rely solely on publicly financed infrastructure. As a result, they should be expected to pay their fair share of taxes to help fund that infrastructure. This business model leaves drivers underpaid and without benefits while weakening public transportation and increasing congestion and pollution on the backs of Canadian taxpayers.

Are Uber drivers subject to any taxes?

Because the CRA views Uber drivers as independent contractors, you’ll have to abide by the same regulations they do. When customers schedule a ride, the price will be increased by federal and applicable provincial taxes. Within 30 days after their first trip, drivers must open a GST/HST account. Before offering services in Quebec, drivers are required to obtain a QST number.

Uber drivers now have to adhere to new rules.

GST/HST has always been charged and remitted by all drivers, not just those making over $30,000. On the other hand, new rules adopted by the CRA became effective. GST/HST definition of “taxi business” in the Excise Tax Act was changed, possibly because of the rise of Uber and Lyft. As a result of the changes, commercial ridesharing drivers like those working for Uber must now:

  • Make sure that you have a GST/HST account, no matter what your income is.
  • Incorporate GST/HST into all fares and collect them.
  • On your income tax return, including GST/HST.
  • Pay the GST/HST due.

Expenses Paid by Lyft and Uber

Write stuff off or claiming costs or reimbursements are terms that you may hear often. Most individuals use them interchangeably while discussing the same topics.

To be an Uber driver is to be a small company owner who may subtract the costs of running his firm, giving rides to people for a living. As a result, your taxable income will become less. An Uber/Lyft driver who earned $40,000 in 2017 but had costs of $10,000 had a net profit of $2,000.

Is there a cost associated with the service/booking fees and commissions that I pay?

Yes, without a doubt! Both Uber and Lyft charge a fee for their services, and that fee is treated as a business cost. When a client uses your service, they pay you, and then you have to reimburse the ridesharing business. Because you never get the money, it doesn’t seem that way. Administrative/management costs are one kind of charge, while agency fees are another. The ridesharing business will provide you with a report at the end of the year that details all of this.

Both Uber and Lyft use “booking fee” and “service fee,” but the same concepts. This is critical since HST will be applied to the total price, which includes these charges. To give you a better idea, the total price you pay is reflected in your earnings on an annual tax summary, and the fees that each ridesharing operator keeps are considered expenditures.

Keep meticulous records on everything.

Uber in Canada employs over 22,000 drivers, and the company has operations in several cities, including Edmonton, Toronto, Ottawa, and Montreal. Everyone is a self-employed business owner, even though they get paid through the Uber app. These drivers do not have any official positions with Uber. Therefore no taxes are withheld from their earnings. According to Uber spokesperson Susie Heath, the contractor is responsible for remitting their taxes to the CRA, who talked to CBC about its use of independent contractors. Room-rental services, for example, follow similar principles in the so-called sharing economy.

How to file for GST/HST and QST registration

The CRA urges commercial ridesharing self-employed drivers to use Business Registration Online to register for GST/HST and other taxes. Uber requires that Quebec drivers have a QST number of driving for the company. Those who want to get one may do it in one of the following ways:

  • To start a new business, use the service to register.
  • Existing companies may take advantage of Incorporation with Revenu Qu├ębec
  • Get in touch with our customer service department.

Make an application for registration by filling out an application form.

Uber is responsible for collecting and remitting QST and GST on behalf of its drivers in the province of Quebec. Uber will collect personal HST/GST from customers throughout the rest of Canada and refund it to drivers weekly.

Here are a few tax-saving strategies for Uber drivers

  • Keep meticulous records of your driving distance, including an accurate odometer reading on the first day of the new year.
  • Please keep track of all business and personal expenditures, and be careful to keep them separate.
  • Regularly update logbooks and arrange receipts to prevent tax season stress.
  • Refunds may be tracked using CRA My Account. Adjustments can be made, such as a change of address or setting up online payments or other services
  • If your financial or personal circumstances change, you should do a tax “dry run” in the autumn before filing your actual taxes.
  • Investigate any possible tax advantages, such as RRSPs, and see whether leasing a vehicle rather than purchasing it is a better option for your business.
  • The cost of any software bought to assist with taxes is fully deducted from your taxable income.
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